Chicago Sun-Times
The scoop from Washington

House voting on consumer financial protection measures,Wall Street reform today

| 1 Comment

Below, from House Democratic leadership on Friday House floor action and recommended Democratic yes or no vote.......

Floor Schedule and Procedure

Complete Consideration of H.R. 4173 - Wall Street Reform and Consumer Protection Act of 2009 (Rep. Frank - Financial Services):. Pursuant to H.Res. 964, Financial Services Committee Chairman Rep. Barney Frank will manage debate. Completion of consideration of the bill will proceed as follows:

Debate and votes on amendments to the bill.
Possible debate and vote on Republican motion to recommit the bill. Members are urged to VOTE NO.
Vote on final passage of the bill. Members are urged to VOTE YES.



Bill Summary & Key Issues


Summary of H.R. 4173 - Wall Street Reform and Consumer Protection Act of 2009

The House has responded to the nation's financial crisis by crafting a comprehensive set of measures that will modernize America's financial regulations and hold Wall Street accountable. Once signed into law, this package of reforms will work together to address the myriad causes - from predatory lending to unregulated derivatives - that led to last year's meltdown. The Wall Street Reform and Consumer Protection Act includes the following major provisions:

Consumer Protections: Creates the Consumer Financial Protection Agency (CFPA), a new, independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services.

Ends Taxpayer-funded Bailouts and Prevents the Rise of Institutions that are "Too Big to Fail": Establishes an orderly process for dismantling large, failing financial institutions like AIG or Lehman Brothers in a way that ends bailouts, protects taxpayers, and prevents contagion to the rest of the financial system. Creates a Systemic Dissolution Fund that can be used to help wind down failing financial institutions, but not to preserve them. The Fund will be pre-funded by assessments on financial companies with more than $50 billion in assets and by hedge funds with more than $10 billion in assets, thus ending the need for taxpayer-funded bailouts. Again, with enactment of this legislation, there are no more taxpayer-funded bailouts for failing institutions. If financial assistance is necessary for orderly dissolution, industry will pay for it.

Financial Stability Council: Creates an inter-agency oversight council that will identify and regulate financial firms that are so large, interconnected, or risky that their collapse would put the entire financial system at risk. These systemically risky firms will be subject to heightened oversight, standards, and regulation.

Executive Compensation: Gives shareholders a "say on pay" - an advisory vote on pay practices including executive compensation and golden parachutes. It also enables regulators to ban inappropriate or imprudently risky compensation practices, and it requires financial firms to disclose any compensation structures that include incentive-based elements.

Investor Protections: Strengthens the SEC's powers so that it can better protect investors and regulate the nation's securities markets. It responds to the failures to detect the Madoff and Stanford Financial frauds by ordering a study of the entire securities industry that will identify needed reforms and force the SEC and other entities to further improve investor protection.

Regulation of Derivatives: Regulates, for the first time ever, the over-the-counter (OTC) derivatives marketplace. Under the bill, all standardized swap transactions between dealers and "major swap participants" would have to be cleared and traded on an exchange or electronic platform. The bill defines a major swap participant as anyone that maintains a substantial net position in swaps, exclusive of hedging for commercial risk, or whose positions create such significant exposure to others that it requires monitoring.

Mortgage Reform and Anti-Predatory Lending: Would incorporate the tough mortgage reform and anti-predatory lending bill the House passed earlier this year. The legislation outlaws many of the egregious industry practices that marked the subprime lending boom, and it would ensure that mortgage lenders make loans that benefit the consumer. It would establish a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.

Reform of Credit Rating Agencies: Addresses the role that credit rating agencies played in the economic crisis, and takes strong steps to reduce conflicts of interest, reduce market reliance on credit rating agencies, and impose a liability standard on the agencies.

Hedge Fund, Private Equity and Private Pools of Capital Registration: Fills a regulatory hole that allows hedge funds and their advisors to escape any and all regulation. This bill requires almost all advisers to private pools of capital to register with the SEC, and they will be subject to systemic risk regulation by the Financial Stability regulator.

Office of Insurance: Creates a Federal Insurance Office that will monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis and undermine the entire financial system.



RECORDING VOTES PENDING: Amendments to H.R. 4173 - Wall Street Reform and Consumer Protection Act of 2009

1. Kanjorski/Frank/Sarbanes/Cohen #51: This amendment would keep in place important investor protections adopted seven years ago after the collapse of the high-tech bubble as it counters the permanent exemption of a subset of public companies, those with less than $75mm market capitalization, from Sarbanes-Oxley compliance. The cost of compliance for this important investor protection has greatly decreased in recent years and the SEC has announced that it would require these remaining public companies to comply beginning in June 2010. Congress should not act to exclude completely a subset of public companies from SOX without getting more information. Our amendment leaves in place a study in the bill on methods to reduce the burden of compliance on smaller companies. H.R. 4173 would also delay compliance with 404(b) for smaller public companies until the completion of this study. This amendment has the support of a myriad of consumer and investors groups including over 200 groups in the Americans for Financial Reform coalition that have all called on Congress to leave section 404(b) of the Sarbanes-Oxley Act unchanged.
Chairman Frank recommends that Members VOTE YES.

2. McCarthy 168: This amendment reverses a Committee amendment to remove some of the protections provided under SEC rules to credit rating agencies. It reinstates an exemption from expert liability enjoyed by rating agencies vis-a-vis other experts in the capital markets, such as accountants. When an expert has her statements included in the offering documents of securities, they are held liable for those statements. Our legislation levels the playing field among our capital markets experts while this amendment seeks to sustain a special role for the rating agencies.
Chairman Frank recommends that Members VOTE NO.

TO BE CONSIDERED: Amendments to H.R. 4173 - Wall Street Reform and Consumer Protection Act of 2009

1. Cohen/Frank #46: This amendment strikes a provision that would authorize FINRA, the self-regulatory organization for broker-dealers, to exercise inspection and rulemaking authority over investment advisers and financial planners who are dually registered as broker-dealers. This far-reaching provision would extend FINRA's jurisdiction to federally registered investment advisory firms that, in aggregate, manage almost 80 percent of all advisory firms' assets under management. This would establish FINRA as the de facto regulator of investment advisers despite the fact that FINRA does not have the necessary expertise or experience with investment advisers or the Investment Advisers Act to do the job. This job should remain in the hands of the SEC.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

2. Peters #22: This amendment permits the FDIC to charge assessments to institutions that will pay into the Systemic Dissolution Fund as a mechanism to repay any shortfalls in the TARP program.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

3. Watt: Would revise the exclusion for auto dealers under the Consumer Financial Protection Agency Act by clarifying what auto dealer activities are excepted.
(10 minutes)
Chairman Frank makes no vote recommendation.

4. Frank/Kanjorski #65: This amendment strikes section 6005 and aims to stem the unintended consequences resulting from the definitional change of NRSRO from "Nationally Recognized Statistical Rating Organization to "Nationally Registered Statistical Rating Organization." Section 6005, though innocuous on its surface, creates inconsistencies in the securities laws as it amends the definition in only the 1933 and 1934 Acts and it impacts state rules and regulations requiring a potential change of state level statutes.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

5. Conyers/Turner/Lofgren/Marshall/Waters/Cohen/Brad Miller/Delahunt/Nadler/Fudge #201: This is the "mortgage cramdown" amendment. It allows certain primary residential mortgages to be modified in Chapter 13 bankruptcy, in which debtors commit to repay debts under court supervision. The amendment is identical to the same provision in H.R. 1106, the Helping Families Save Their Homes Act of 2009, which pass the house March 5, 2009. The provision allows bankruptcy courts to extend repayment periods, reduce excessive interest rates and fees, and adjust the principal balance of the mortgage to a home's fair market value as necessary to prevent foreclosure.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

6. Garrett #215: This amendment would allow a credit rating agency to deregister with SEC as Nationally Recognized Statistical Rating Organizations (NRSRO), provided such NRSRO certifies that it received less than $250 million in net revenue during its last full fiscal year for rating securities and money market instruments in the U.S. This provides easier access to the market for smaller rating agencies that provide valuable alternative analysis to investors and a check against the oligopoly of the Big Three rating agencies.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

7. Wittman #222: This amendment clarifies that the federal banking laws do not prohibit banks from accepting deposits, cashing checks, or performing other lawful banking services for a State operating a lottery. The amendment also clarifies that such institutions are not prohibited from announcing, advertising, or publicizing any lottery that primarily benefits 1 or more charitable organizations.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

8. Minnick #33: Defines "unfair, deceptive, or abusive" acts or practices within the context of CFPA. Determination by CFPA that an act or practice is "unfair" or "deceptive" must be made in accordance with existing FTC policy statements on those terms. The amendment sets forth standards under which an act or practice may be determined to be "abusive."
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

9. Bartlett #25: Permits State supervisory authorities to review and grant exceptions on a case by case basis to mortgage originators who have been designated a lifetime ban from originating mortgage under the SAFE ACT.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

10. Schakowsky/Titus #209: The amendment requires the CFPA Director to examine the practices of lenders that originate reverse mortgage, to prescribe regulations which prevent unlawful, unfair, deceptive or abusive acts and practices in connection with reverse mortgages, and to provide for standard and model disclosures for reverse mortgage transactions. This is designed to protect seniors from abusive reverse mortgage transactions, including marketing of imprudent investments in connection with these loans.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

11. Kilroy #103: Reiterates bill's requirement that amounts used from the Systemic Dissolution Fund to stabilize the system are to be repaid to the Fund only from assets of the dissolved company and, if those amount are insufficient, additional assessments on industry.
(10 minutes)
Chairman Frank recommends that Members VOTE YES.

12. Minnick/Schock/Shuler/Castle/Campbell/Betsy Markey/Reichert/ Teague/Bright/Boren/Griffith #88: This amendment would perpetuate consumer protection's second-class status in financial regulation. This would mean no enhanced effectiveness of national consumer protection laws. In additionthe Minnick amendment would undo the bill's expanded consumer protections over subprime mortgage lending, payday lending, money transfers and other abusive practices that currently are subject to no effective Federal supervision. Instead of establishing an independent agency with strong regulatory authority, like the underlying bill, the Minnick amendment would create a 12-member "Consumer Financial Protection Council" made up of existing regulators. These agencies have safety and soundness as their primary mission, and as a result have failed to protect American consumers adequately for decades. Instead of having authority to stamp out unfair practices, this council would be relegated to recommending that the financial regulators do their jobs and issue consumer protection regulations and regulations. It would leave ineffective enforcement in place. Failure to provide oversight to subprime lending was a key contributor to the current financial crisis, but the Minnick amendment would do nothing to change that situation or crack down on these practices.
(20 minutes)
Chairman Frank recommends that Members VOTE NO.

13. Republican Substitute - Bachus/Biggert/Capito/Hensarling/Garrett/ Neugebauer #87: This amendment strikes H.R. 4173 in its entirety and substitutes it with weak provisions, which do little or nothing to bring increased accountability and responsibility to Wall Street or to provide consumers with protections from abusive financial services. The amendment fails to respond to the significant need for consumer protection and financial reform made clear by the current financial crisis. The substitute does not address the causes of the last crisis and also leaves open known loopholes that could lead to future crises. Significantly, the substitute is completely silent on reform to the largest contributor to the crisis: out of control mortgage origination. The substitute includes zero provisions on mortgage reform and predatory lending. It leaves open the hedge fund loophole.
(30 minutes)
Chairman Frank recommends that Members VOTE NO.


Quote of the Day

"They always say time changes things, but you actually have to change them yourself."

-- Andy Warhol

1 Comment

Nice Summary. I don't understand why the house is neglecting the discussion of how a governance body needs international support. A lot of firms that are "too big too fail" are globalized and measures would have to be taken on an international level if someone had to come in and take action.

I found this link to be helpful ( http://cboenews.com/9-29-2009/index.php ) when discussing regulations of OTC derivative markets.

Hope you like it!

Jacob
CBOE advocate

Leave a comment

Get the Sweet widget

More widgets

Video

Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

Stay in touch

About this Entry

This page contains a single entry by Lynn Sweet published on December 11, 2009 8:50 AM.

Dick Durbin named most admired senator by congressional insiders polled by National Journal was the previous entry in this blog.

Rep. Luis Gutierrez renewing push for immigration reform Tuesday is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.